USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 134

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Assume that the dividend payout ratio will be 75 percent when the rate on long-term government bonds falls to 8 percent. Because investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 15 percent return. The return on equity will be 12 percent.
-Refer to Exhibit 9.2. What is the expected sustainable growth rate?

• A) 9.0 percent
• B) 7.2 percent
• C) 6.0 percent
• D) 3.0 percent
• E) 3.6 percent

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Definitions:

Dynamic

Characterized by continuous change, activity, or progress, often used to describe systems, processes, or personalities.

Micromanagement

A management style where a manager closely observes or controls the work of subordinates or employees.

Theory Y

A management concept that assumes employees are self-motivated, enjoy work, and will seek and accept responsibility and self-direction.

Empower

To give someone the authority or power to do something or to make someone stronger and more confident, especially in controlling their life and claiming their rights.